Britain has won a significant share of a €566m (£510m) programme to build the
first spacecraft providing Europe's satellite-navigation system.

Surrey Satellite Technology, based in Guildford, and its German bid partner OHB System were awarded a contract to build 14 satellites for theGalileo navigation system, Europe's much-delayed version of the US-run Global Positioning System (GPS). About 40pc of the €566m order will go to Surrey Satellites.

The company is providing Galileo's navigation equipment, which includes atomic clocks, and the transmission system which sends the information gathered by the satellite down to users. OHB will build the satellite platform.

Surrey Satellites and OHB beat a rival bid from Astrium Germany, part of European defence company EADS.

The new Galileo satellite service will be up and running in 2014.

Satellite navigation systems require 27 satellites to cover the earth, and the EU would like to order 32 in total. The programme has funding until 2013, which will cover 22 satellites, and is expected to be extended by the member states after that.

Surrey Satellites employs 300 people, and estimates the Galileo work will create 100 jobs for graduate and PhD -level engineers. Some of those posts will be filled by people working on Surrey's other projects, which include building satellites for the Russian space agency.

The Galileo project has been beset by delays and cost overruns. From an initial estimate of £1.8bn, the programme will now cost EU taxpayers £5bn.

Europe wants its own satellite-navigation system because almost all the region's transport infrastructure is now dependent on it, and at present Europe depends on the US-run system – which was originally developed for the armed forces – not to withdraw access to GPS.

Galileo promises to be accurate to within less than a metre, significantly better than GPS, which is based on 1970s technology and can sometimes "drift" by 10 metres. It is also hoped the new system will offer a more reliable service, as sometimes it can be difficult to obtain a "fix" on current GPS satellites, especially in built-up areas.